Credit Scores and Ratings

Our company reports provide a credit score and limit. Below is a list of questions that further explains how our scores and ratings are calculated.

What data do you use?

In order to produce a credit score, we analyse and identify trends and patterns in current and historical companies. To create our current scoring model, we used the patterns and trends of 3.2 million active limited companies and 1.3 million dissolved companies (that dissolved in the last 5 years). These companies are then monitored over a period of 2 years.

The primary data that were used during analysis are company accounts, county court judgment data, directors and shareholders.

From these specific areas, we identified approximately 100 fields that we would use in our scoring model. From these, a subset of fields for each of the 5 scoring models that we are using were selected.

Financial factors
Financials fields that are analysed and factored into our credit score include the following:

• Turnover
• Cash and bank deposits
• Creditors, bank loans and overdrafts
• Working capital, intangibles
• Current assets, current liabilities, net assets, fixed assets
• Pre-tax Profits, operating profits and pre-tax profits
• Ratios and trends over assets and liabilities
• Share capital, reserves, negative shareholder funds
• Negative insolvency ratios
• Long term liabilities
• Profit

Non-financial factors
We also look at other factors when calculating credit scores. These factors include the following:

• Number of employees
• Age of the company
• Number of CCJ's
• Late filing of accounts
• A company moving their accounting reference date
• Number of bad directors - directors who are directors of other companies that have all become dissolved within last few years
• Level of Qualification of the Auditors

What companies are excluded?

There are a number of reasons why a company will be excluded from being given a credit score. These are as follows:

• The company is already dissolved
• Their account type shows that the company has:
  • Dormant accounts
  • Initial accounts
  • Missing accounts
  • Filing Exemption Subsidiary
  • Audited Abridged
  • Unaudited Abridged
• The company does not have a balance sheet
• They were incorporated up to 3 years ago but have not been trading
• The company is a foreign based company (those with company numbers beginning in "FC")
• The company is late in filing their accounts

What effect does a company's late filing of accounts have?

Credit score calculations are based on the latest filed accounts. If they are not available for analysis due to being filed late or not at all, this is automatically seen as an early warning sign that there is an issue with the company.

Do the scoring models differ based on the company type?

Different types of companies perform in different ways. We have grouped our scoring models into 5 main areas depending on the type of company accounts that a company has filed. These are as follows:

• Total Exemption Small – 68% of companies
• Companies with only 1 balance sheet (1st year of trading) – 11% of companies
• Group, full accounts medium accounts – 9% of companies
• Total Exemption Full – 9% of companies
• Small companies – 3% of companies

Why is my credit score different compared to other providers?

All companies that offer a credit score create their own based on their interpretation of market factors and analysed accounts. Our credit score has been developed after a comprehensive analysis of companies over a period of two years. We are confident that our score is indicative of the financial position of the company over the next financial year.

What are the credit score ranges?

The following bands show the range and what each one signifies:

• 00 - 20 High Risk
• 21 - 40 Caution
• 41 - 60 Normal
• 61 - 80 Stable
• 81 - 99 Secure

What is the credit limit/rating?

This is the maximum credit limit that is recommended to give to the company at any one time.

How is the credit limit/rating calculated?

The value is first calculated as a portion of the maximum recommended borrowing limit between operating cash flow, proxy profit and proxy equity. This will then give a figure to reflect the short term trade credit limit.

This rating is then adjusted in relation to the probability of the company becoming insolvent based on the value of the calculated credit score. The resulting rating is then analysed and further adjusted based on the strength of the overall financial ratios of the company. The ratios and probabilities differ depending on the market sector the company is based in which is determined by the SIC code of the individual company.

Minimum credit limit

If we are able to calculate a credit score and limit then £500 is the minimum we allocate to a company.